EBay and Amazon, com - Internal Capabilities and Resources - Case Study Example

Title Name: Student Number: Lecturer: Institution: Internal Capabilities and Resources The core competencies that create a competitive advantage for eBay The core competencies of eBay include the variety of products through auctioned pricing, a global reach with a community-driven sense of operation clearly identifiable by the establishment of eBay University and the open negotiation platform for buyers and sellers. eBay reaches out globally through acquaintances with over 250 alliances and partnerships with international companies. These core competencies are outstanding in comparison to those of major rivals and upcoming threats in the e-business market. This is especially so, due to the fact that eBay is the pioneer establisher of a university borne out of e-business. The openness of the auction trading ensures that the buyers and the sellers have a sense of satisfaction at the end of each trading since both the buyer and the seller have on the selling/purchase price. The global partnership offer logistics, payment platforms and security measures on business operations. Strategies used in mitigating the strategic foundation risks In combating the strategic foundation risks, cautious steps will be taken and consequently put to valuable use when analysing the possibility of the occurrence of a problem critically as well as in prior planning for any perceived risk-taking ventures to help reduce or completely eliminate the impact that such threats would bear. Diversifying investments in a variety of approaches aimed at realizing the same results is a viable way of mitigating strategic foundation risks. The diversification will ensure the accommodation of a productive redundancy as advised by Brest & Harvey, (2008, p.51). Tools used in Monitoring Risk Identification and Mitigation Strategy The tools to be used in exhaustively monitoring risk identification and mitigation strategy will make use of the SWOT analysis, porters five forces, PESTEL and Value chain Analysis to determine the magnitude of variance as well as the application of measurement techniques on performance as argued out by Heldman (2007, p.441). Amazon.com - Porter’s Five Forces Analysis Amazon is a web-based online store that incorporated four functions of the book business through distributing, e-store, customers and ebooks. Amazon empowered the customer to review, buy and sell books online, consequently lowering the power other stores had. Amazon’s core competencies are customer empowering, product variety, personal Customer Relation, website quality and pricing tools, Mulqueen (2011). Amazon’s Strengths and Weaknesses Strengths Weaknesses Widest online platform Global brand name Customer Relationship Management with a personalized approach Variety and selection User feedback platform through reviews 3G wireless download via KINDLE exclusively availed by amazonkindle.com Efficient logistic systems with prompt delivery Consumer confusion is risked due to wide selection of diverse products Penetration of selected foreign markets due to environmental inhibitions like sanctions and technological constraints Dependence on external logistic firms that may compromise service delivery Critical relationships and key players in e-business As argued out by Kidd (2000, p438), there exists the traditional retailer/manufacturer relationships through to the customer, direct sellers and E-agent relationship, customer-through-retailer to online manufacturer relationship, and the E-business shopping platform directly to the customer. The relationships create a way through which customers can be reached via the business model. The ebusiness platform redefines the customer-supplier relationship by allowing the possibility of the customer to buy and sell. However, this can only be achieved through the use of two different accounts, one as a supplier and the other as a customer. A good example is eBay, where a customer can use an account to sell finished products and another to acquire new ones. The impact this alteration has on planning is replication and redundancy in effort to cover the customer needs and supplier needs differently while addressing the same player. Strategic Choice and Evaluation How Environmental Analysis at the Domestic Level Differ From Global Level Environmental analysis at the domestic level is usually covers generalized, more uniform and less unstable considerations compared to a variety of considerations at the global level. According to the World Bank (as cited in Encyclopedia for Business, 2011) cultural factors are homogeneous at domestic level and heterogeneous at the global level, currency uniformity at the domestic level compared to a variety of currencies and rates of exchange at the global level. Economic and government factors at the domestic level are uniform and non-volatile, while they may be volatile at the global level. While there may be available skilled labour domestically, difficulty may be experienced in acquisition of skilled labour globally. At the domestic level, media for marketing may be vast with fewer restrictions while at the global level the converse may be true. Domestically, transport and infrastructure may be competitively available and globally inadequate. The strategic Position of Amazon.com, Sustainability and Recommendations Amazon.com has made a name in ebusiness through online selling of book being the World’s most popular bookstore. Amazon heavily invests in advertising to attract traffic on the site through search engines like Google linking to the bookstore. Product descriptions and the site usability are friendly with discounts of up to 40% being awarded. Amazon makes huge sales that do not translate into a rising profit margin. Amazon keeps track of customer purchases and offers them as suggestions on what other books relate to their choice. Harris & Dennis (2002, 2008, p.256) argue that Amazon boasts of exceptional logistics and exemplary customer service. The position is sustainable through implementation of some improvements. The major recommendations for Amazon focus on Customer Relationship Management that entails individual customer treatment, customer acquisition and retention while banking on allocation of resources to customers on lifetime value basis. Innovation of competencies is favoured over acquisitions due to the ease of integration of the newly-defined competencies with less indulgence in exploiting financial resources that consequently increase costs and an organization’s debts. Innovation surpasses acquisition in the achievement of synergy with less diversification and distractions emanating from complex analysis and too much diversification experienced in the acquisition of the competencies. Since the organization is already familiar with its targeted areas of improvements, innovation ensures adequate target evaluation compared to acquisition of competencies. Conversely, innovation of new ideas and products poses a higher risk with a relatively lower market power and decreased diversification in comparison to the acquisition of competencies. Innovation may not succeed in permeating entry barriers as successfully as acquisition of competencies may. There are relatively low learning opportunities for developing new potentials that consequently alter an organization’s competitive scope, (Michael, Duane & Robert, p.191) References Brest, P., & Harvey, H. (2008). Money well spent: a strategic plan for smart philanthropy (ed.1.). (P.51). Bloomberg Press, NY. http://books.google.com/books?id=QIj7tj3vKCYC&pg=PA51&dq=how+to+mitigate+your+strategic+foundation+risks&hl=en&ei=SeO2Td-FJsel8QPQgc1I&sa=X&oi=book_result&ct=result&resnum=4&ved=0CEMQ6AEwAw#v=onepage&q=how%20to%20mitigate%20your%20strategic%20foundation%20risks&f=false Kim, H. (2007). PMP: Project Management Professional Exam Study Guide. Indianapolis, IN: Wiley Publishing, Inc. http://books.google.com/books?id=S90OXB5trKoC&pg=PA441&dq=tools+used+to+monitor+risks&hl=en&ei=kaW3Ten-CseaOteHwJUP&sa=X&oi=book_result&ct=result&resnum=4&ved=0CG0Q6AEwAw#v=onepage&q=tools%20used%20to%20monitor%20risks&f=false Paul, K. (2000). E-business: key issues, applications and technologies.. P.438. IOS Press, Amsterdam. http://books.google.com/books?id=6FVAfEFyMcwC&printsec=frontcover&dq=E-business:+key+issues,+applications+and+technologies&hl=en&ei=GFe5TfT1BdKo8AO9x4VC&sa=X&oi=book_result&ct=result&resnum=1&ved=0CE8Q6AEwAA#v=onepage&q&f=false Reference for Business. (2011). Encyclopedia for Business: Strategy in the Global Environment (2nd ed.). Retrieved 26 April, 2011 from http://www.referenceforbusiness.com/management/Str-Ti/Strategy-in-the-Global-Environment.html. Harris, L. & Dennis, C. (2002, 2008). Marketing the e-business (2nd ed.). (P. 256).. Routledge, Axon. http://books.google.com/books?ei=OlW5Tdf4AcSW8QOv27Qw&ct=result&id=m9TL-gmzOscC&dq=marketing+the+e+business&q=256#v=onepage&q=256&f=false Michael, H., Duane, I., Robert, H. (2007, 2009). Strategic management: competitiveness and globalization: concepts & cases (8th ed.). (P. 191). Mason,OH: South-Western Cengage Learning: http://books.google.com/books?id=ul5FsIlWa3EC&pg=PA206&lpg=PA206&dq=how+acquisitions+differ+from+innovations+in+strategic+management&source=bl&ots=2V_cLEyTJC&sig=0V_lydxH14r7aTYd3iZknBH6fVg&hl=en&ei=NCy5TaH5E9Sn8QPlh4FW&sa=X&oi=book_result&ct=result&resnum=1&sqi=2&ved=0CBoQ6AEwAA#v=onepage&q=acquisition&f=false Mulqueen, K. Kate Mulqueen: Consulting for Human Resources, Organizational Development and Training. Retrieved: 28 April 2011 from http://www.consulting4hr.com/articles.html. Read More